Book Review: How to Make Money in Stocks

The Book ‘How to make money in Stocks’ is written by William J. O’Neil and is widely considered a classic in investing circles.

The author is a veteran trader and his approach towards the markets is “Been there,seen that”

He compares himself to an historian and believes that since markets are ruled by crowd psychology,many of the stock patterns in the past repeat themselves and will repeat again in the future.

The first chapter contains around 100 charts which make for interesting reading.

The second chapter explains how to read charts and how to select the right time/price to buy a particular stock.

But which stock to buy?He has a criteria called CAN SLIM which stands for:

C=Currently Big/Accelerating Sales and Earnings Per Share

A=Annual Earnings Increases with Big Growth

N=New Companies,New Products,New Earnings

S=Supply and Demand of Stock Volumes

L=Leader or Laggard

I=Institutional Sponsorship

M=Market Direction

There is a chapter on each one of these concepts which explain at length on how to apply them

The last section is on a very neglected aspect of investing-when to sell

The author is of the firm view that one should book losses quickly (not more than 8%) and let the profits run.

While all the examples are from the US, there are many investors in India who swear by the book and attribute their profits to it.

Do buy the book if interested in trading.

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